There are fears that Nigeria’s jobless population could increase and worsen the already high unemployment figure amid the outbreak of coronavirus. However, a recent survey by PwC shows 78.4 percent of businesses in the country are not considering staff lay-off.
With economic activities in Nigeria almost grinding to a halt as a result of the coronavirus pandemic, analysts project that Africa’s largest economy could see a host of its population becoming jobless.
“Unemployment would see a significant climb particularly in vulnerable industries like airlines, leisure and industries with discretionary products because revenue will suffer significantly,” Ayorinde Akinloye, equity research analyst at CSL Stockbrokers, said.
But of the 3,000 respondents ranging from managers to CEOs and business owners that were sampled in the recent survey by PwC, 2,353 of them said they are not considering the option of downsizing their staff as a result of the crisis.
“Most businesses (78.4 percent) do not plan to lay off staff as a result of the crisis,” Taiwo Oyedele, fiscal policy partner and West Africa tax leader at PwC, said while providing the result of the survey findings during a recent webinar hosted by the firm to discuss the economic implications of COVID-19 on businesses and Nigeria’s policy responses.
Of all the respondents, 21.6 percent said they would lay off various percentages of staff as a consequence of the pandemic. Of this group, however, 55.3 percent do not think government intervention would influence their decision on staff lay-off, with the rest indicating they would retain their employees if government’s intervention was able to take care of varying percentages of their staff wage bill.
Asked what their top business concerns were, 22.5 percent pointed at liquidity, which is the availability of immediate cash to pay bills especially following disruption to business activities that has been experienced.
Overall, the businesses surveyed agree that the private sector has a role to play in supporting government’s fight against COVID-19, with 85.5 percent suggesting that they are best suited to provide support in the area of provision of items, equipment and facilities compared to only 10.7 percent who will consider donating cash to the government.
Nigeria reported 86 new cases of coronavirus on Sunday, taking the total number of confirmed cases in Africa’s most populous country to 627, according to NCDC data.
The odds of Nigeria’s crude-dependent economy slipping into a recession are increasingly becoming likely as the crude price has hit a low point due to glut in supply. This is coupled with the fact that the slowdown in economic activities is also expected to affect the bottom line of most companies.
In a situation where Nigeria can contain the outbreak of coronavirus, the country’s least worst-case scenario, it will be reporting a GDP growth of -3.4 percent in 2020, as projected by McKinsey. This would be a growth decline of almost six percentage points from the country’s last year’s expansion of 2.5 percent.
“That would represent a reduction in GDP of approximately $20 billion, with more than two-third of the direct impact coming from oil-price effects, given Nigeria’s status as a major oil exporter,” McKinsey & Company said in a recent report seen by BusinessDay.
Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants.
Out of about 4.8 million Nigerians who entered the country’s labour market between 2015 and 2018, about 635,000 jobs were created within the period, indicating only a job was available for every eight people who joined Nigeria’s economically active workforce.
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